A Mathematical Model For Evaluation Of Assets Returns In A Volatile Economy

Abstract

In recent years, advance in technology have made it possible for the stock markets

to trade in real time and also for large dataset to be available for statistical analysis.

Thus, we examined the impact of macroeconomic variables on the stock returns of

114 companies listed on the Nigerian Stock Exchange Market. We have established

the mathematical framework required to solve our model and perform various empir-

ical analysis on the stock market data and macroeconomic variable. The formulated

Macroeconomic Factor models are deployed to evaluate the e_ects of the macroeco-

nomic variables on a volatile economy and Ordinary Least Square procedure are de-

ployed to estimate the parameters of the model. We apply the model to the available

data and discovered that the stock market return volatility is inuenced by the selected

macroeconomic variables; Gross Domestic Product, Ination, Foreign Exchange Rate,

Unemployment, Interest Rate, Price of Crude Oil and Money supply.